What CEOs say happened in Trump’s closed-door meeting with big pharma

During a meeting of pharmaceutical company leaders at the White House, President Trump said that while there have been many successes in drug development, the pricing has been "astronomical" and must come down. (Reuters)

Since the early days of his campaign, President Trump vocally criticized rising drug prices. Occasionally, he faulted the government's inability to negotiate directly on drugs purchased through Medicare, a practice prohibited by law.

But in a meeting Tuesday with pharmaceutical executives, Trump's words were less clear. The executives say, behind closed doors, Trump never brought up government intervention on drug pricing. Meanwhile, Trump's public remarks were loaded with conflictingsignals.

Before he closed the meeting-room door, Trump called for lowering “astronomical” drug prices but didn't specify how. Instead, he said that he would oppose “price-fixing” in Medicare — a term conservatives use critically to describe what would happen if the government were to negotiate directly with pharmaceutical companies.

Some said it was a clear reversal of Trump's policy position. But Trump also said he wanted “bidding wars” and told an anecdote about how he could buy aspirin at a pharmacy counter for cheaper than the U.S. government, which he pointedly called “the biggest purchaser of drugs anywhere in the world by far.”

During a later media briefing, in response to a request to clarify the president's drug-price plan, White House press secretary Sean Spicer criticized the “bureaucracy” that held back government programs such as Medicare from bargaining.

“He is a successful businessman and a top-notch negotiator,” Spicer said of Trump. “You've got such purchasing power that's not being utilized to the full extent.”

But pharmaceutical executives who met with Trump in private say he never brought up that policy, and his concern about drug prices did not mean he believes the government should directly bargain.

“We did not have a conversation in there that leads me to believe that they think the solution to that problem is secretarial negotiations,” Merck chief executive Kenneth Frazier said in an investor call Thursday morning. “We know there'll be bills that are introduced in Congress calling for that. But I think the fact of the matter is ... that is not perceived to be the solution to the problem.”

Amgen chief executive Robert Bradway said that the meeting didn't delve into the specific role the Department of Health and Human Services, which administers Medicare, would play.

“We talked about the need for all of us to work together to address making medicines affordable and accessible to people who benefit from them and need them,” Bradway said.

In an earnings call hours after the meeting, Eli Lilly chief executive David Ricks said the pricing discussion focused on the affordability of drugs to patients at the pharmacy counter. Because drug prices are influenced by many entities between the time they leave the drugmaker and arrive at the pharmacy, that focuscould deflect some scrutiny on pricing to other parts of the labyrinthine drug pricing ecosystem, like pharmacy benefit managers that negotiate prices on behalf of insurers.

“We did not get into elaborate policy detail in terms of the U.S. pricing environment,” Ricks said.

That Trump apparently didn't bring up the topic in the meeting is telling. But to some observers, it isn't much different than what he's been saying about “negotiating” drug pricesall along.

“This word, 'negotiate,' is completely consistent with private markets,” said Dan Mendelson, president of Avalere Health, a health-care consulting firm. “I think the government using its clout appropriately is consistent with setting up markets that enable competition that reduces prices for consumers. The government sets up the market; it doesn’t choose the price.”

For example, Medicare's prescription drug benefit is administered by private plans that already negotiate drug prices. That leads to discounts, and proponents of a market-based solution say speeding up the Food and Drug Administration's generic-drug approval process would strengthen those negotiations by creating a more competitive market. They note that Medicare's prescription drug spending has been lower than the Congressional Budget Office projected, although the reason for the savings are debated. The Congressional Budget Office has said that the policy Trump has previously championed, along with many Democrats, of allowing the government to negotiate directly would have a “negligible” effect on federal spending, although it has populist appeal.

“President Trump made it clear in the White House meeting I attended with him and Vice President Pence: He wants competition that will bring lower drug prices,” Walden said. “Patients are tired of waiting for relief.”

Trump clearly said he supports regulatory reform that might get drugs on the market faster. That could increase competition — and bidding — if it triggers more head-to-head competition between similar drugs. It also may reflect what is actually possible, given long-standing Republican opposition to direct government negotiation on drug prices for Medicare. Walden said that a bipartisanbill sponsored by Reps. Gus M. Bilirakis (R-Fla.) and Kurt Schrader (D-Ore.) to speed the review process for generic drugs that are in shortage or have little competition will be considered by a House subcommittee next week.

“They're telegraphing that all options are on the table,” Mendelson said of the ambiguity around Trump's statements. “But all of these changes would require legislation, and they will need to work with a fairly reliable Republican Congress on these issues. And the solution set does not include the government going in and setting a price, to me.”